WEST SPRINGFIELD, Mass, November 14, 2011 — Cyalume Technologies, Inc. (OTCBB:CYLU), the world leader in chemiluminescent technology, today announced its financial results for the three months ended September 30, 2011. Cyalume reported revenues of $8.6 million and fully diluted EPS of $0.01, compared to sales of $11.7 million and fully diluted EPS of $0.06 for the third quarter of 2010. Adjusted EBITDA, which is earnings before interest, taxes, depreciation, amortization, non-cash stock-based compensation, foreign currency gains and losses, and certain one-time gains or expenses totaled $1.7 million for the third quarter, compared to $4.0 million in the third quarter of 2010.

Third Quarter Revenue Breakdown by Revenue Sector:

·

Military Chemical Light: $4.6 million

·

Reflective: $1.1 million

·

Ammunition: $1.4 million

·

Commercial/Public Safety: $1.0 million

·

Cyalume Specialty Products: $0.5 million

“The third quarter proved in line with our expectations as U.S. military purchasing decreased due to the depletion of inventory balances. However European sales remained robust and the reflective and commercial business performance increased significantly over the year-ago period. The quarter was highlighted by the acquisition of the business of JFC Technologies, now known as Cyalume Specialty Products (CSP). CSP benefits us not only as an in-house specialty chemicals supplier but also as they grow their other business lines, which will further support the diversification of our revenue streams and significantly enhance our performance and strategic advantages in the near-term,” stated Derek Dunaway, president and CEO.

“We continue to make significant progress in executing on our strategic plan to grow Cyalume into a multidimensional company that is recognized globally for its technological innovation and expertise. We remain focused on expanding our customer base and end-market exposure by developing new products and exploring additional partnerships. The opportunities in the ammunition and law enforcement markets are vast, and we are confident in our ability to grow sales and expand our footprint in those areas,” added Dunaway.

Three contract extensions with NAMSA, the NATO Maintenance and Supply Agency

Cyalume will host a management call tomorrow, November 15, at 11:00 a.m. ET to discuss the quarter’s results. The live webcast can be accessed on the investor relations page of the Cyalume website at investor.cyalume.com. To participate in the call, dial (877) 312-7507 within the U.S., or (253) 237-1164 for international access, and provide conference ID 20222685. A replay and transcript of the call will be posted to the investor relations page shortly after the conclusion of the call.

# # #

About Cyalume Technologies, Inc.

Cyalume Technologies is the world leader in chemiluminescent (chemical-light) technology, producing different variations of chemical-light products in all light wavelengths for the ammunition, military and public safety markets. The products provide dependable light solutions for training and battlefield operations, safety and emergency demands and non-toxic ammunition alternatives. Cyalume is the exclusive supplier to the U.S. and NATO-country militaries for all of their chemical-light needs and operates manufacturing facilities in the U.S. and France. Through its subsidiary Cyalume Specialty Products, Cyalume manufactures all of its active chemical components in the U.S. The Company has strategic partnerships with Rheinmetall Waffe Munition, GmbH, General Dynamics, Fiocchi Ammunition and Nammo Talley.

The Cyalume Technologies Holdings, Inc. logo is available at:

http://www.globenewswire.com/newsroom/prs/?pkgid=8101

Forward-Looking Statements:

Certain statements made in this press release constitute forward-looking statements that are based on management's expectations, estimates, projections and assumptions. Words such as "expects," "anticipates," "plans," "believes," "scheduled," "estimates" and variations of these words and similar expressions are intended to identify forward-looking statements. Forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, as amended. These statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Therefore, actual future results and trends may differ materially from what is forecast in forward-looking statements due to a variety of factors. All forward-looking statements speak only as of the date of this press release and the company does not undertake any obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.

Results of Operations — Adjusted Basis

Adjusted net income is an alternative view of performance used by management and we believe that investors' understanding of our performance is enhanced by disclosing this information. We define adjusted net income as the net income of Cyalume excluding amortization expense. The adjusted net income measure is not, and should not be viewed as, a substitute for U.S. GAAP net income. Adjusted net income is an important internal measurement for us. We measure the performance of the overall Company on this basis. The following are examples of how we use adjusted net income:

·

Senior management and the Board of Directors receive a quarterly analysis of our operating results that is prepared on an adjusted net income basis;

·

Our annual budget, as presented to the Board of Directors, is prepared on an adjusted net income basis

Despite the importance of this measure, we stress that adjusted net income is a non-GAAP financial measure that has no standardized meaning under U.S. GAAP and therefore, has limits in its usefulness to investors. Due to its non-standardized definition, adjusted net income (unlike U.S. GAAP net income) may not be comparable with the calculation of similar measures for other companies. Adjusted net income is presented solely to permit investors to more fully understand how management assesses our performance.

In addition, components of Adjusted EBITDA are a key component in the determination of our compliance with certain covenants under our credit agreements. Adjusted EBITDA is not a measure of financial performance under GAAP. Adjusted EBITDA should not be considered in isolation, or as a substitute for net income, cash flows, or other consolidated income or cash flow data presented in accordance with GAAP or as a measure of our liquidity or financial condition. Because Adjusted EBITDA is not a measure determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as discussed may not be comparable to other similarly titled measures of other companies.

The use of Adjusted EBITDA as a supplemental liquidity measure is useful as it assists management in understanding and evaluating the Company's capacity, excluding the impact of interest, taxes, and non-cash depreciation and amortization charges, for servicing debt and other cash needs, prior to our consideration of the impacts of other potential sources and uses of cash, such as working capital items. Investors may find it useful for these purposes as well. Adjusted EBITDA should not be considered an alternative to, or more meaningful than, net cash provided by operating activities, as determined in accordance with GAAP, since it omits the impact of interest, taxes and changes in working capital that use or provide cash (such as receivables, payables and inventories) as well as the sources or uses of cash associated with changes in other balance sheet items (such as long-term loss accruals and deferred items). Because Adjusted EBITDA excludes depreciation and amortization, Adjusted EBITDA does not reflect any cash requirements for the replacement of the assets being depreciated and amortized, which assets will often have to be replaced in the future. Further, Adjusted EBITDA, because it also does not reflect the impact of debt service, income taxes, cash dividends, capital expenditures and other cash commitments, does not represent how much discretionary cash we have available for other purposes. Nonetheless, Adjusted EBITDA is a key measure expected by and useful to our investors, rating agencies and the banking community in the analysis of a Company's ability to service debt, fund capital expenditures and otherwise meet cash needs, respectively. Cyalume also evaluates Adjusted EBITDA because it is clear that movements in these non-GAAP measures impact the Company's ability to attract financing. Adjusted EBITDA, as calculated, may not be comparable to similarly titled measures reported by other companies.

Contact:

Aimee Gordon

Investor Relations

413-386-3434

agordon@cyalume.com

Cyalume Technologies Holdings, Inc.

Condensed Consolidated Statements of Income

(in thousands, except shares and per share information)

(Unaudited)

For the Three

For the Three

Months Ended

Months Ended

September 30,

September 30,

2011

2010

Revenues

$

8,601

$

11,570

Cost of goods sold

4,629

5,483

Gross profit

3,972

6,087

Other expenses (income):

Sales and marketing

1,060

917

General and administrative

1,503

1,343

Research and development

489

402

Interest, net

563

631

Interest - related party

1

17

Amortization of intangible assets

451

441

Other, net

(232

)

91

Total other expenses, net

3,835

3,842

Income before income taxes

137

2,245

Provision for (benefit from) income taxes

(107

)

916

Net income

$

244

$

1,329

Net income per common share:

Basic

$

0.01

$

0.09

Diluted

$

0.01

$

0.06

Weighted average shares used to compute net income per common share:

Basic

17,381,750

15,511,183

Diluted

18,202,764

17,524,995

Source: Financial statements from Form 10-Q filed November 14, 2011.

Cyalume Technologies Holdings, Inc.

Condensed Consolidated Statements of Income

(in thousands, except shares and per share information)

(Unaudited)

For the Nine

For the Nine

Months Ended

Months Ended

September 30,

September 30,

2011

2010

Revenues

$

26,355

$

29,859

Cost of goods sold

13,613

14,695

Gross profit

12,742

15,164

Other expenses (income):

Sales and marketing

3,258

2,481

General and administrative

4,557

4,109

Research and development

1,427

1,135

Interest, net

1,771

1,931

Interest - related party

35

49

Amortization of intangible assets

1,256

1,353

Other, net

(448

)

-

Total other expenses, net

11,856

11,058

Income before income taxes

886

4,106

Provision for (benefit from) income taxes

(574

)

1,585

Net income

$

1,460

$

2,521

Net income per common share:

Basic

$

0.09

$

0.16

Diluted

$

0.08

$

0.14

Weighted average shares used to compute net income per common share:

Basic

16,549,504

15,466,133

Diluted

18,279,284

16,240,932

Source: Financial statements from Form 10-Q filed November 14, 2011.

Cyalume Technologies Holdings, Inc.

Condensed Consolidated Balance Sheets

(in thousands, except shares and per share information)

September 30,

2011

December 31,

(unaudited)

2010

Assets

Current assets:

Cash

$

3,361

$

4,086

Accounts receivable, net of allowance for doubtful accounts of $76 and $62 at September 30, 2011 and December 31, 2010, respectively

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